Should You Get A Tax Refund Loan Or Wait?

Companies and businesses are now preparing to get the W2 to their staff on time, which means that the tax season will soon begin. The Internal Revenue Service (IRS) encouraged taxpayers to take important steps as soon as this month to be prepared for filing their federal tax returns in 2022 while offering guidance regarding economic impact payments and child Tax Credit advance payments. The tax agency recently released a fact sheet outlining steps taxpayers can take from now on to avoid headaches and unpleasant tax surprises.

The Delayed Refund

Refunds will later reach taxpayers’ hands this year. That’s already a fact after the Internal Revenue Service (IRS) delayed the start of the 2021 tax season. This is news that will affect millions of Americans since they had that money to make certain payments. It is a rule that, generally, the people who bet on a refund are those who are going to file their return as soon as possible. Although the first tax refunds are expected to begin in March, analysts agree that, given the economic crisis and uncertainty, taxpayers would like to have this money in their hands before the date of their actual refunds.

Refund Loans

In addition, the truth is that there are still 2019 declarations that have not been processed, delays in the postal mail, and even the havoc that the weather has caused lately in various parts of the United States, have an impact on the work of the IRS. For those who cannot wait for this refund to arrive, there are so-called advance refund loans, which are made available to taxpayers by companies that are dedicated to the preparation of income taxes.

The Interest and Fees

The peculiarity of these loans is that they are paid once you receive the repayment from the Internal Revenue Service. Its main con is that its interest rates are generally high, in addition to its fees, especially if you take into account that the loans are granted for a short period (less than three months): it is charging 7% interest.

The Reimbursement

Faced with this situation, the Marketwatch site investigated how these loans work in the event that you decide to ask for one in lieu of your tax refund.

-The programs of advanced checks for reimbursement do not charge interest, for the most part, but they have complicated rates to understand. That is, the lower the amount of your refund, the higher the rate they charge you. Otherwise, if your refund is large, you will be charged a lower fee. -These loans are granted under the condition that they must be paid at the time the IRS pays your repayment. Their annual rates generally exceed 36%.

Hire a Professional

It is best to follow the right protocol when preparing for the tax season. If you can wait for your refund, it is recommended that you do. For that reason, it is best to hire tax preparation services in Denver to get the professional help you may need.